Compulsory ADR in Cayman: Court Confirms It Has Teeth But Declines to Bite

Background: The Position in England

The Court’s analysis was heavily influenced by the English Court of Appeal’s landmark decision in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416. In Churchill, the Master of the Rolls comprehensively reviewed the question of whether courts could lawfully compel parties to participate in mediation or other forms of ADR, a question previously thought to have been answered negatively in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002.

The Court of Appeal in Churchill concluded that Halsey‘s prohibition on compulsory ADR was merely obiter dicta and not binding. More importantly, Churchill held that courts possess inherent jurisdiction to order parties to engage in non-court-based dispute resolution, provided such orders:

1. do not impair the essence of a claimant’s right to a fair trial (consistent with Article 6 of the European Convention on Human Rights);
2. pursue a legitimate aim; and
3. are proportionate to achieving the aim of settling disputes fairly, quickly and at reasonable cost.

Following Churchill, the English Civil Procedure Rules were amended in October 2024 to expressly codify the court’s power to order ADR, with the amendments understood to be clarificatory and aimed at removing any lingering uncertainty.

The Unicorn Decision: Confirming Jurisdiction

Justice Asif found the reasoning in Churchill to be “of very considerable persuasive value” and applicable in the Cayman Islands. His analysis proceeded on several grounds:

First, Article 7(1) of the Cayman Islands Bill of Rights mirrors Article 6(1) of the European Convention on Human Rights. As established in R v Anderson [2014] 2 CILR 60, decisions of the European Court of Human Rights interpreting Article 6 have “considerable persuasive value” when construing equivalent Cayman provisions. The Master of the Rolls’ detailed analysis of how compulsory ADR complies with Article 6 therefore translates directly to the Cayman context.

Second, by virtue of section 11 of the Grand Court Act, the Grand Court possesses the same inherent jurisdiction as the English High Court. While the Grand Court has not adopted the Civil Procedure Rules wholesale, it has largely embraced the overriding objective, the philosophical foundation undergirding active case management and the promotion of ADR.

Third, Justice Asif rejected arguments that subsequent amendments to the English CPR demonstrated that no such power existed previously. The rule changes were properly characteised as clarificatory, not substantive, merely making explicit what Churchill confirmed was already within the court’s inherent powers.

The Court also rejected the suggestion that the Cayman Islands’ judicial mediation scheme indicated a different policy choice. Justice Asif observed, in practical terms, that the scheme has seen limited uptake due to constraints on judicial resources and the procedural difficulties that can arise if a mediation fails, particularly where the same judge would otherwise be required to continue hearing the case and may then face a potential application for recusal.

The Exercise of Discretion: A Multi-Factorial Analysis

Having confirmed jurisdiction, Justice Asif turned to how the power should be exercised. Following Churchill, he declined to establish a rigid checklist, noting that “the decision whether or not to make an order compelling the parties to engage in some form of ADR is multifaceted and multifactorial.”

However, the judgment endorsed the indicative factors identified in Churchill, including: the form of ADR proposed; whether parties are legally represented; the parties’ understanding that unsuccessful ADR leaves them free to proceed to trial; urgency and potential delay; costs (both absolute and relative to the claim value and parties’ resources); realistic prospects of resolution; any imbalance in resources or bargaining power; and reasons given for refusing ADR.

Critically, Justice Asif emphasised that the test is not whether settlement is more probable than not, but rather whether ADR has a “real prospect” of furthering the overriding objective. ADR may have utility even without achieving complete settlement, by narrowing issues and focusing the parties on what truly matters.

Application to the Facts: When Compulsion is Inappropriate

Despite confirming the power, Justice Asif declined to compel mediation in Unicorn. His reasoning provides valuable guidance on when courts will exercise the power – and when they won’t:

The case concerned a multi-billion dollar fund embroiled in parallel Cayman and Delaware litigation. The limited partners (holding 98% economic interest) sought declarations and winding up based on alleged breaches of duty by the general partner. Personal relationships had irretrievably broken down, with the limited partners insisting on complete severance from the general partner and its principal, Dr Harrison, a demand which they flatly rejected.

Justice Asif concluded that compulsory mediation was inappropriate in this case because:

1. the parties’ entrenched positions meant that there was no realistic chance that mediation would succeed at that stage;
2. the nature of the dispute (involving allegations of loss of trust, mismanagement, misappropriation and breach of fiduciary duty) made mediation less likely to succeed;
3. imposing mediation in mid-December 2025 would disrupt trial preparation on an already compressed timetable (trial was scheduled for mid-January 2026); and
4. the likelihood of success did not outweigh the cost and disruption.

Notably, Justice Asif expressly rejected the argument that commercial sophistication and experienced legal representation militate against mediation. Such factors do not indicate that settlement would already have been explored if viable. Indeed, he observed that attorneys often adopt “strident” and “entrenched” positions, and that “a healthy reality check by an independent mediator” can facilitate more realistic assessments – a point that may resonate with battle-weary in-house counsel.

Practical Implications

The Unicorn judgment has several important implications for litigants in the Cayman Islands: 

• Consider ADR proactively and early: Mediation and ADR have been firmly part of the Cayman litigation landscape for many years. Unicorn makes clear that Courts expect parties to engage meaningfully with ADR possibilities throughout proceedings and have the power to compel parties. Standard directions orders now routinely require parties to consider settlement actively, with witness statements explaining any refusal to engage in proposed ADR (as was the case in Unicorn itself).

• Document ADR engagement carefully: In order to justify their approach, parties should ensure that they document their approach to mediation / ADR. In Unicorn the defendant’s refusal to waive privilege over settlement correspondence prevented the Court from forming a complete picture of the parties’ ADR efforts. While privilege of course remains important, parties should be aware that refusing to waive privilege may make it hard to justify an order for compelled mediation.

• Timing matters, but cuts both ways: While the Court found the December mediation proposal too disruptive given the January trial, an earlier proposal would have been more difficult to resist. However, parties are not required to mediate prematurely – there must be sufficient information to make mediation worthwhile.

• Strength of case is not a complete answer: Justice Asif’s observation that even strong cases may benefit from mediation should give pause to parties who might otherwise assume their position is unassailable. The question is whether ADR has a “real prospect” of utility, not whether settlement is probable.

• Intractable disputes are not automatically exempt: The fact that relationships have broken down or positions appear entrenched will not necessarily excuse parties from court-ordered ADR. Justice Asif cited English authority emphasising that mediation can succeed “even with initially unwilling parties” and is “capable of cracking even the hardest nuts.“

Closing Thoughts

While Justice Asif ultimately declined to compel mediation in Unicorn, the significance of the judgment lies in confirming for the first time that the Grand Court possesses, and will exercise, the power to compel mediation and will do so in appropriate cases. The multi-factorial, case-specific approach adopted mirrors the English position post-Churchill, while the detailed analysis of why compulsion was inappropriate in Unicorn itself provides valuable guidance on the boundaries of this jurisdiction.

For parties litigating in the Cayman Islands, the message is clear: ADR cannot be ignored or treated as an optional extra. Courts will expect meaningful engagement with ADR possibilities, and parties who unreasonably refuse may find themselves subject not only to adverse costs consequences but also to orders compelling participation.

The question is no longer whether courts can compel ADR, but when they will.